Correlation Between Carpenter Technology and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both Carpenter Technology and Thyssenkrupp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Carpenter Technology and Thyssenkrupp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carpenter Technology and Thyssenkrupp AG ADR, you can compare the effects of market volatilities on Carpenter Technology and Thyssenkrupp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Carpenter Technology with a short position of Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carpenter Technology and Thyssenkrupp.
Diversification Opportunities for Carpenter Technology and Thyssenkrupp
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carpenter and Thyssenkrupp is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Carpenter Technology and Thyssenkrupp AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thyssenkrupp AG ADR and Carpenter Technology is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Carpenter Technology are associated (or correlated) with Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thyssenkrupp AG ADR has no effect on the direction of Carpenter Technology i.e., Carpenter Technology and Thyssenkrupp go up and down completely randomly.
Pair Corralation between Carpenter Technology and Thyssenkrupp
Considering the 90-day investment horizon Carpenter Technology is expected to generate 0.66 times more return on investment than Thyssenkrupp. However, Carpenter Technology is 1.52 times less risky than Thyssenkrupp. It trades about 0.42 of its potential returns per unit of risk. Thyssenkrupp AG ADR is currently generating about 0.2 per unit of risk. If you would invest 14,950 in Carpenter Technology on September 1, 2024 and sell it today you would earn a total of 4,454 from holding Carpenter Technology or generate 29.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Carpenter Technology vs. Thyssenkrupp AG ADR
Performance |
| Timeline |
| Carpenter Technology |
| Thyssenkrupp AG ADR |
Carpenter Technology and Thyssenkrupp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carpenter Technology and Thyssenkrupp
The main advantage of trading using opposite Carpenter Technology and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carpenter Technology position performs unexpectedly, Thyssenkrupp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.| Carpenter Technology vs. Worthington Industries | Carpenter Technology vs. Ryerson Holding Corp | Carpenter Technology vs. Mueller Industries | Carpenter Technology vs. Allegheny Technologies Incorporated |
| Thyssenkrupp vs. Mueller Industries | Thyssenkrupp vs. ESAB Corp | Thyssenkrupp vs. Worthington Industries | Thyssenkrupp vs. Allegheny Technologies Incorporated |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |